Local Officials Question Tax Plans

Both major candidates for governor are touting homeowner tax relief. It may play well with voters, but they are winning no points from local elected officials.

FOR THE RECORD - Published correction ran Tuesday, March 29, 2005.In Sunday's Local News section, a chart showing sample increases in area home values attributed the data to the wrong sources. The information came from the U.S. Census Bureau and Claritas 2004. (Text deleted.)

"I'm not impressed with either candidate's plan," said Michael Brown, who chairs the James City County board.

In neighboring Williamsburg, Mayor Jeanne Zeidler shares that view.

"I'm very disappointed that both of these candidates are taking this up as an issue," she said. "This is a local tax. We have a lot of responsibilities to deliver services to our citizens. We need funding streams that are reliable and predictable."

And this personal observation from James Campbell, executive director of the Virginia Association of Counties: "My biggest frustration is statewide candidates promising to cut the local taxes."

Local real estate taxes have zoomed to the top of the state campaign agenda. Republican Jerry Kilgore, former state attorney general, and Democrat Lt. Gov. Tim Kaine both say they're responding to complaints from homeowners who have been stunned by skyrocketing assessments.

They say rising property values hold no advantage for homeowners who can't pay their tax bills. And putting more money into homeowners' pockets helps the local economy.

Kilgore has proposed a constitutional limit on assessments. Kaine would give localities more options to declare property tax exempt, and he vows to push more money into public schools on the theory that it would spur cuts in real estate taxes.

Neither plan would guarantee a drop in real estate taxes. Kilgore's plan would keep assessments under control, but localities could still raise the tax rate. Kaine's plan would give localities more tax-exemption options, but it wouldn't compel them to act.

A handful of local officials interviewed this past week -- without taking a position on either plan -- expressed no enthusiasm for statewide candidates who want to fiddle with the biggest tax localities have.

"I'm always worried when they try to bring it down to the local level," said York County Supervisor Sheila Noll.

Noll hasn't examined either plan in detail and remains open to suggestions. And yes, she can understand why the complaints are pouring in. Assessments in some regions of the state have risen by leaps and bounds.

But before the General Assembly starts debating constitutional amendments or other dramatic fixes, she says, the state must come to grips with financial pressures facing local government.

"I think they need a reality check," she said.

Money generated by the real estate tax gets put into public schools. County supervisors and city councils set the tax rate, and they're held accountable for it, said Michael Amyx, executive director of the Virginia Municipal League.

It's not as if councils and county boards are operating in a political vacuum.

"I suspect that the average citizen knows their local property tax rate and very probably knows what's happened to it in the past several years," he said. "Local government officials, when they face re-election, that's a key piece of information."

Localities already provide different types of tax relief and housing grants for the elderly and disabled, Amyx said.

The league hasn't taken a position on either the Kaine or Kilgore plan, but it plans to survey its members to come up with options.

There are a few.

Struggling homeowners could qualify for a credit on their state income tax. Property taxes could be deferred -- when a house is sold and the income is received, the tax bill could be paid off.

"That's a little bit of crystal-ball gazing," Amyx said.

A state tax credit sounds like a good idea to Brown, of James City County.

"If they really want to do something useful, rather than handcuff the ability of local officials, they should consider something that affects state taxes," he said.

Ultimately, local governments will want flexibility when it comes to their most important source of revenue.

"Any artificial restraints on that will have some immediate impact on public service," Amyx said.

Amen, says Williamsburg's Zeidler.

She does not favor Kilgore's proposed constitutional cap. It would limit assessment increases to 5 percent a year unless the property is sold or improved.

"Just a blanket capping of property tax is a one-size-fits-all approach that actually fits nobody," she said.

Kaine does not want to cap assessments. He proposes a constitutional amendment to allow a 20 percent tax exemption for a home or farm. He will also push a plan that would allow localities to declare significant additions and renovations tax-exempt for 15 years.

"That isn't to say I like Mr. Kaine's approach either," Zeidler quickly added. "Local governments need to put the pressure on themselves. We have conversations and dialogue with our citizens. We can do that without Tim giving us the ability to do that."